I have always liked the notion that a rising tide lifts all ships. It’s so easy to visualize and has been proven to be true in a number of marketing categories. Certainly one would expect the hybrid market to be just such a rising tide. The truth is that while hybrid sales are way up, one vessel is leading the fleet and that’s the Prius. MediaPost had a helpful article last week that clarified why Prius continues to dominate and why some other brands like the Honda Accord hybrid have failed:
Although there are now 11 hybrid models for sale in the U.S. market, Prius still accounts for over 50% of all new hybrid vehicles bought in the U.S. According to J.D. Power & Associates, it will continue to dominate.
The key factor here is that hybrid drivers want everyone else to know they are driving a hybrid. There is no mistaking a Prius. It looks different and it sounds different (basically noiseless when it is in full electric mode something most hybrids can’t do). On the other hand, the weak selling Civic hybrid looks just like a Civic. Also from MediaPost:
Dan Gorrell, president of Auto Stratagem, a research and consulting firm in Tustin, Calif., concurs. “Consider the hybrid Highlander (SUV). It hasn’t sold well, partly because it violates a major issue: you need to look different. A lot of why people are buying hybrids has to do with being noticed; it’s a self-esteem issue.”
A secondary issue is the price premium consumers are willing to pay for a hybrid. Toyota continues to offer cash incentives to drive sales of their four hybrid models. Turns out that $2400 is about as high as consumers are willing to go. Honda found this out the hard way offering the now discontinued Accord hybrid for $3700 more than the standard model.
Marketing for Good is delighted that all the car companies are racing to join the hybrid market. This will ensure pricing pressure that will hopefully lead to mass adoption. That said, we don’t expect that all the companies will do well in this market even if they are trying to do good. The Prius is leading the category for good reason. It was first to market with a distinctive design that screamed “hey I’m green.” Subsequent entries from competitors have not been able to match either the design or the performance. For the time being, American consumers want their hybrids as stand-alone brands and not simply as a dealer option. Until Detroit and other automotive manufacturers start producing hybrids that lead the market (i.e. design, cost, mileage, comfort) then I’m afraid this particular rising tide may only lift the good ship Prius.